increasing with the overnight rate, fears of a recession are mounting. There are two big questions. First, are there alternatives to the blunt overnight rate for fighting inflation? Second, how bad will the recession need to be to bring inflation back down? Unfortunately, the answer to the first question is no, there aren’t any viable alternatives. However, the recession that could result might not be as bad as feared.
Is the trade-off of a possible recession worth it to bring inflation back down? Most economists subscribe to the idea that as unemployment falls, economic growth picks up until a level where demand starts to exceed supply, causing higher inflation . The thinking then goes that to tame inflation, we need to bring economic growth to heel, which causes unemployment to go up.
The problem with this analysis is that when the central bank is doing a good job of keeping inflation close to the 2 per cent target – as it has largely done since 1995 – future inflation is unrelated to current economic conditions. But when inflation is out of its ideal range, as was the case during the Great Recession, and is the case today, a more standard relationship between inflation and the state of the economy returns.
We‘re always brainstorming ideas, yet we frequently find ourselves with limited resources to execute our “extraordinary” dreams, don't we? Believe me, I know everything about the “no-money” mindset. For years I struggled with this painful scarcity, in my head.
The monetary policies to fight inflation are raising interest rates and QT. The fiscal policy includes higher taxes, reduced unproductive spending, and price controls. Given these extraordinary circumstances a greater emphasis on fiscal policy is needed. - Wifey
Alternately: Could, not hiking the interest rate do more harm than good? We see you!
No. Failing to raise rates years back put us in this mess. Rate hikes need to be more aggressive to give buffer space.
No One Knows the outcome of raising interest rates until after it happens.
Shouldn't be exaggerated. Meanwhile, so low interest rates also had poisoned housing market as well.
We need recession to tame the demand and inflation. Keep raising the rates.
Short answer: YES!
Soon we will be just like US a decade ago, live house to the bank and go. Poor Canadian people on this regime government.
Opinion: Could not hiking interest rates do more harm than good?
Oh FFS here we go. Deal with inflation now !!!!! Bank raises rate. NOOOOOOOOOO don't that !!!!!!
only to people who are trying live in a house, buy a car, or . . . well, starting a business in this Corporatocracy is off the table. But you get the idea.
No point to own a home. Everything goes to interest
Higher rate cause recession for sure. They don't understand what caused the highest inflation rate in decades. Just simply rise the rate.
The harm and the good don’t fall on the same people.
I feel bad for anyone who voted for trudeau thinking he was going to help the middle class
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